1 in 7 Northampton Properties are Leasehold

There are 23.36 million properties in England and Wales with 64% being owner occupied and 36% being rented either from a private landlord, local authority or housing association.

Over nine out of ten of those English and Welsh owner-occupied properties are a whole house or bungalow. Now, most people would assume they would be freehold – however, of those renting nearly half of rental properties, 44% to be precise, lived in other leasehold apartments and flats.

It might be wise to quickly explain the difference between freehold and leasehold. When someone owns the freehold of a property they own it outright, including the land it is built on, whilst with a leasehold property the leaseholder owns the property for the length of their lease agreement. Leaseholders must pay the person who owns land (the freeholder) ground rent and other fees. When the leasehold ends, ownership returns to the freeholder although the leaseholder can extend the lease or they can buy the freeholder out, but there are rules and regulations with regards doing that.

Therefore, it would be safe to assume that houses are freehold and flats are leasehold… wouldn’t it? Not necessarily! Most houses are freehold but some might be leasehold – usually through shared-ownership schemes – but more and more new homes builders are selling houses on a leasehold as well. The protection of the law afforded to leaseholders who own a flat is massive, but sadly lacking to leasehold houses sold privately.

Looking specifically at the figures for Northampton, at the last count in NN1 there were 15,924 properties. Since 1995, 16,567 properties in NN1 have changed hands and have been sold. Looking further at those 16,567 transactions in NN1 since 1995, using data from Land Registry and solicitors practice My-Home-Move, 13.1% have been leasehold (lower than the national average of 15%).

However, I am concerned about a few new homes builders selling new houses (not flats – houses) as leasehold. There has been a growing (yet small) trend for new-build houses to be sold as leasehold in recent years. While not all house builders use this model, those that do maintain it helps make developments financially viable.

The issue comes when builders sell the freehold separately to an investment company without informing the leaseholder – which they are legally allowed to do without telling the leaseholder. In England and Wales, the “right of first refusal” to buy the freehold is written in law to leaseholders of flats i.e. the freeholder must offer it to the leaseholders of all the flats of the building first), but not leaseholders of houses.

… and this is the point I am trying to get across. If you are buying a new home and it’s a house (i.e. not a flat) – please check very carefully indeed whether its freehold or leasehold. If it is a leasehold, whilst you do have rights, they are not as strong as for those people buying a leasehold flat. I appreciate I am only talking about a very small percentage of the property market, but potentially this could end up costing thousands of pounds to those affected.

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This blog follows the property market in Northampton. You'll find tips, guidance, and analysis that relates specifically to the property market in Northampton. You will also find properties from all the estate agents in the town on here that may make decent investments. I run Northwood here in Northampton and if you're thinking of buying a property to let in Northamptonshire, I'm happy to offer a second opinion.

MEET THE AUTHOR

Katherine Bond

Hi and thank you for visiting my blog. I have been with Northwood in the Northampton property market since 2002 and have always shared my thoughts on the local property market in Northampton with our landlords and home owners, but now using modern technology, I want to share with everyone in the town.

In this blog, I will talk about what is happening in the Northampton’s property market itself, even looking at specific streets or housing estates. At other times, I will post what I consider decent buy to let deals (almost ‘Homes under the Hammer’ for Northampton). The deals will be on the market with other agents in Northampton as well as ourselves. I like to look at the whole of market and give you, what I consider the best investment opportunities.

At other times, I will post properties that I consider need serious consideration for homeowners. They might be because they are good value, nicely presented or some other reason that I think you might find of interest. If you see a potential deal, and want a second opinion, please do not hesitate to contact me. I will always give you our honest opinion on the property and if its a buy to let property, it’s investment potential. (both good and bad).